Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. Trade-Ideas LLC identified CF Industries Holdings ( CF) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified CF Industries Holdings as such a stock due to the following factors:
- CF has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $311.7 million.
- CF has traded 733,704 shares today.
- CF traded in a range 226.6% of the normal price range with a price range of $12.74.
- CF traded above its daily resistance level (quality: 536 days, meaning that the stock is crossing a resistance level set by the last 536 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher. EXCLUSIVE OFFER: Get the inside scoop on opportunities in CF with the Ticky from Trade-Ideas. See the FREE profile for CF NOW at Trade-Ideas More details on CF: CF Industries Holdings, Inc. manufactures and distributes nitrogen and phosphate fertilizer products worldwide. It operates in two segments, Nitrogen and Phosphate. The stock currently has a dividend yield of 1.7%. CF has a PE ratio of 8.8. Currently there are 6 analysts that rate CF Industries Holdings a buy, 1 analyst rates it a sell, and 7 rate it a hold. The average volume for CF Industries Holdings has been 819,200 shares per day over the past 30 days. CF has a market cap of $13.3 billion and is part of the basic materials sector and chemicals industry. The stock has a beta of 1.96 and a short float of 1.9% with 0.94 days to cover. Shares are down 0.6% year-to-date as of the close of trading on Tuesday. STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more. TheStreetRatings.com Analysis: TheStreet Quant Ratings rates CF Industries Holdings as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income. Highlights from the ratings report include:
- 44.32% is the gross profit margin for CF INDUSTRIES HOLDINGS INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CF's net profit margin of 21.34% significantly outperformed against the industry.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CF's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.83 is very high and demonstrates very strong liquidity.
- The revenue fell significantly faster than the industry average of 13.5%. Since the same quarter one year prior, revenues fell by 19.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Chemicals industry and the overall market, CF INDUSTRIES HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- You can view the full CF Industries Holdings Ratings Report.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.